• It is vital that you research the crypto market before diving in headfirst. Moreover, you must remember to invest only the amount you can afford to lose.
• Furthermore, quickly transfer the coins that you gain from a trade in the trading platform to your desired wallet – hot or cold.
Image: REUTERS
Did the hype revolving around Bitcoin finally entice you? Well, you are not the only one! Thousands of would-be traders find curiosity in Bitcoin trading.
However, rumours and misconceptions prevent them from actually entering the world of cryptocurrency. This is not to say that the assumptions are completely false. Yes, the market is volatile, and there are wild fluctuations in Bitcoin price.
However, with efficient trading strategies, you can ride out the lows with ease and garner substantial profits in the highs. But, before all that, you need to know the basics. Here is a beginner's guide for all those interested in gaining profit from Bitcoin trading.
Ask yourself why you want to indulge in Bitcoin Trading
Before you even begin to read this guide, you must ask yourself a vital question. Why do you want to trade in Bitcoin? Is it because your colleagues or friends are also doing it? Or is it due to the fact that Bitcoin has grabbed your attention and you want to test the waters? The answers to these questions will ultimately affect your trading plans and outcomes.
If you are in a dilemma or feel comprehension, sort it out before you invest your time and money here. Make sure that you have a clear mind before indulging in Bitcoin trading on platforms like Bitcoin Mastery.
What is Bitcoin trading?
Bitcoin trading is actually the purchasing and selling of Bitcoins within a short period of time. Here, the traders do not hold the coins. They sell it whenever there is a scope for profit.
Is Bitcoin trading and investing differently?
People might use trading and invest as synonyms, but these are different terms having varied meanings. Bitcoin investing is the purchase of Bitcoins and then holding them for a long time. They intend to HOLD the coins and ride out the lows of the market. The best part is that you can be both a Bitcoin trader and investor.
Common terminologies in Bitcoin trading
If you are sure about Bitcoin trading, you must, at least some, of the common terminologies. Take a look at some of them.
Price: Here, the price actually refers to the price of the latest Bitcoin trade on a particular trading platform. It is vital to note that Bitcoin does not have a universal price. The price of Bitcoin can vary depending on countries and trading platforms.
High and low: Apart from price, you will also find the words “low” and “high” written beside the actual Bitcoin price. It is basically the lowest and highest price that Bitcoin has undergone in 24 hours.
Limit order: This specific market order allows traders to set a particular price for the purchasing or selling of Bitcoins. However, the order may not be completed if other participants (sellers or buyers) do not meet the requirement.
Volume: Volume is the number of Bitcoins that have undergone trading in a particular timeframe. This duration of time can be 24 hours, weeks, or even a month.
Different types of trading
You might be surprised, but there are various types of trading in the crypto market. As such, you need to choose which type of trader suits your end goal the best.
Swing traders: If you are looking for a long-term profit, then swing trading is a favourable option for you. Here, traders concentrate on the swing in the prices of Bitcoins. They enter a particular position and can sit on it for days till they reach the goal.
Scalp traders: Are you looking for small profits? Then, scalp trading is the best option for you. Here, the traders opt for considerably short-term trading to make small profits. The advantage is that you have fewer risks and the ability to make numerous trades in a single day.
Day traders: Just as the name suggests, day trading means trading Bitcoins throughout the day. These traders aim to make a substantial amount of profit with small movements in price.
Various analysis methods
There is absolutely no steadfast rule that enables traders to perfect their Bitcoin trading strategy. However, you have access to a wide range of technical items like charts, graphs, and historical data to assess the market trend. It will help you in making well-informed trading decisions.
There are two main analysis methods that you can use to estimate the Bitcoin price. These include – Fundamental analysis and Technical analysis.
Fundamental analysis
In fundamental analysis, the traders assess the market, any related news that can affect the currency rates and other technical developments. It takes a more detailed approach towards the external factors.
Technical analysis
In technical analysis, traders take note of the trading volumes and previous price movements. This approach pays much more attention to market statistics.
If you want to establish a perfect Bitcoin trading plan, then you need to consider both. However, it will take time for you to comprehend the meaning of the graphs and charts.
How can you trade Bitcoin?
Though Bitcoin is one of the most popular cryptocurrencies, it does not have an official exchange platform. That makes it difficult for amateur traders to find reliable crypto trading platforms. However, with some effort and time, you can find out the best in the market with ease. Some of the most highly sought-after trading platforms include Coinbase, Kraken, Binance, etc.
Check out the following steps to know how you can trade Bitcoin.
Step 1: Create a trading account in any of the Bitcoin trading platforms
Step 2: Wait for verification
Step 3: Transfer amount into your account
Step 4: Make the first move in Bitcoin trading
Final words
These are some of the most basic information any novice trader must-have. It is vital that you research the crypto market before diving in headfirst. Moreover, you must remember to invest only the amount you can afford to lose.
Furthermore, quickly transfer the coins that you gain from a trade in the trading platform to your desired wallet – hot or cold. And lastly, try to leave emotions out when you make crucial trading decisions.